Procter & Gamble Company - Research Paper Example

?Procter & Gamble Company Touching lives, improving life. This slogan of Procter and Gamble Company (P&G) defines the company’s goal to provide branded products and services of superior quality that would improve the quality of life of 4.2 billion consumers worldwide and in the generations to come (Procter & Gamble Co., 2011). The company, which has been in the industry for 174 years, has earned a great number of recognitions over the years. These included, to cite a few, a 6th ranking on Fortune’s “Global Most Admired Companies”, a 2nd on Fortune’s “Top Companies for Leaders” survey, top rankings on the Dow Jones Sustainability Index from 2000 to 2010, and most innovative manufacturer in the consumer packaged goods industry for the last decade given by the Symphony IRI group. In addition, P&G has also been recognized by the National Association for Female Executives (Top 50 Companies for Executive Women) and Black Enterprise magazine (40 Best Companies for Diversity); awards related to creating a diverse workplace. On top of that, P&G has been consistently a member of the Billion Dollar Roundtable, made up of 17 corporations that spend more than $1 billion annually with diverse suppliers, since 2005 (Procter & Gamble Co., 2011). P&G serves consumer, household and pharmaceutical goods to consumers in more than 180 countries. Having around 127,000 employees for ground operations in 80 countries (Procter & Gamble Co., 2011) , the company makes at least 250 brands in six main categories: laundry and cleaning (detergents), paper goods (toilet paper), beauty care (cosmetics and shampoos), food and beverages (coffee and snacks), feminine care (sanitary towels) and health care (toothpaste and medicine), (Corporate Watch , 2002). Among the quality and leadership brands manufactured by the company are Ivory, Pampers, Tide, Ariel, Always, Whisper, Pantene, Folgers, Charmin, Downy, Lenor, Iams, Crest, Oral B, Actonel, Duracell, Olay, head & Shoulders, Wella, Gilette, and Braun (Procter & Gamble Co., 2006). History P&G has changed the lifestyle of consumers worldwide, the history of which can be rooted way back in 1837 in Cincinnati, Ohio. William Procter, who was originally from England, and James Gamble, an immigrant from Ireland, had crossed paths when they married sisters Olivia and Elizabeth Norris (Procter & Gamble Co., 2006). The partnership of the two was suggested by their mutual father-in-law, Alexander Norris, who stated that both William’s trade, candle making and James’ which was soap making would utilize lye from animal fat and wood ashes that were prominent in Cincinnati (FundingUniverse, 2003). At that time of the business establishment, Williams and James used a forward-looking approach despite the financial panic across US wherein banks were bankrupt and competition among soap and candle makers were tough. Despite the years leading to civil war in the 1850s, P&G was able to obtain large contracts from the national government to provide the Union army with soap and candle products (Dyer, Dalzell, & Olegario, 2004). Furthermore, Williams and James’ company was able to start one of the first profit-sharing programs in the US, and also invested in a research laboratory (Procter & Gamble Co., 2006). It was in the 1890s when P&G developed and sold 30 different types of soap, which included the famous brand Ivory and soaps for dishwashing and washing clothes. The effective advertisements of the products through the use of radio “soap operas”, product sampling and promotional premiums increased the demand which led to expansion of operations in Kansas City, Kansas and Ontario, Canada. Another world-wide known product introduced by P&G in 1946 was Tide. The introduction of Tide was remarkably successful which paved the way to having new markets across continents (Procter & Gamble Co., 2006). A few years following the sensation of Tide, several products were brought into the market. The first fluoride toothpaste, Crest, became popularly known as it was endorsed by the American Dental Association. Procter and Gamble’s pulp-making technology embarked on products such as toilet tissue, paper towel, and the widely-used disposable diaper branded as Pampers in 1961. The partnership also led to strengthening its business by entering the food and beverages industry in 1963 with the introduction of Folger’s coffee and “Downy”, the first ever fabric softener. Entering the international business seemed very lucrative as the operations in 23 countries had grown strong, earning at most $11 billion in 1980. From 1980 and onwards, P&G has grown into one of America’s largest multinational companies. Over the years, P&G played a vital role in the health care industry including beauty and personal care products and developed worldwide research and development networks across United States, Europe, Japan and Latin America. Challenges Although P&G is among the top corporations in the world, the business also faced challenges. According to the Procter & Gamble (2006) report, the company’s stock declined dramatically in year 2000 which created a loss of $50 billion in its market capital. The reaffirmation of the company’s purpose and values got the company back on track. This resulted in 40% increase in sales, doubled profits, more than $30 billion cash flows and more than $70 billion shareholder value. The management also decided to merge with The Gillette Company in 2005, after gaining Clairol and Wella in ten years time. A portfolio of 22 billion-dollar brands and almost $200 billion market capitalization made P&G as one of the leading corporations in Fortune 500 up to date. Reports from Fortune (2010) show that P&G ranked the 22nd company in the list of Fortune 500 Companies in 2010. In 2009, shipping costs skyrocketed and affected P&G’s profits. In order to combat this, the prices of the company products were raised by $4 billion and rolled out Olay Professional Pro-X line, P&G’s most costly and newest Olay skin-care line. The new products helped strengthen the company’s brands and higher prices increased profits by 11% amidst recession. In the fiscal year of June 30, 2009, P&G’s revenues amounted to 79,697 (in $ millions), profit was at 13,436 (in $ millions), assets were at 134,833 (in $ millions) and stockholders’ equity at 63,099 (in $ millions) based on Fortune (2010). Comparing P&G with the other companies of the same industry, the discrepancy of its ranks is still quite high. Next to its 22nd ranking in the Household and Personal Products Industry was Kimberly-Clark at 126th with revenues amounting to 19,115 (in $ millions). Whereas, Colgate-Palmolive only ranked the 151st with 15,327 (in $ millions). This goes to show that P&G, among the companies of the same industry, perform significantly better as shown by the large gap in ranking in terms of profits, revenues, and assets (Fortune, 2010). Sustainability Efforts In order to meet to the company’s purpose – to touch and improve lives, now and for generations to come – P&G follows five sustainability strategies. Strategy 1 focuses on Products by developing and marketing at least $50 billion in cumulative sales of “sustainable innovation products” that improve the company’s environmental profile. Strategy 2 centers on its Operations by improving the environmental profile of P&G’s operations. P&G’s third strategy is based on Social Responsibility by improving children’s lives through the company’s social responsibility programs. The last two strategies are for the Employees and its Stakeholders by means of engaging all P&G employees to create sustainable work values and practices and working with credibility with stakeholders to allow freedom for innovation (Procter & Gamble Co., 2010). Based on Procter & Gamble’s Sustainability Overview (2010) report, the company presented its long-term environmental sustainability vision that include: (1) powering the plantations with 100% renewable energy; (2) using 100% renewable or recycled materials for all products and packaging; (3) zero consumer and manufacturing wastes in landfills; and (4) designing products to delight consumers while maximizing the conservation of resources. The achievement of these sustainability visions would only be strengthened by ensuring steady developments within the company’s operations. Therefore, a set of goals was created to be achieved by 2020. P&G targets to power up operations with 30% renewable energy and replacing 25% of the petroleum-derived raw materials with renewable materials from sustainable sources. The commitment of the company in achieving the highly demanding visions and goals would assess the fulfillment of P&G’s purpose. A company would not be successful for 174 years if it could not satisfactorily cater the needs of its clients – the people. From the partnership of candle maker William and soap maker James, to a multinational company, P&G indeed has grown and taken a large responsibility to improve the lives of families worldwide and continuously apply ingenuity on its products whilst making sure that the environmental impacts are still in place. References Corporate Watch. (2002). Food and Agriculture: Procter & Gamble. Retrieved April 19, 2011, from Corporate Watch: Corporate Critrical Research since 1996 Web site: http://www.corporatewatch.org.uk/?lid=247 Dyer, D., Dalzell, F., & Olegario, R. (2004). Rising Tide: Lessons from 165 Years of Brand Building at Procter & Gamble. Massachusetts: Harvard Business School Publishing. Fortune. (2010, May 3). Fortune 500 2010: Top 1000 American Companies-Procter & Gamble. Retrieved April 19, 2011, from Fortune on CNNMoney.com Web site: http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/334.html FundingUniverse. (2003). Company Histories: FundingUniverse. Retrieved April 19, 2011, from FundingUniverse Web Site: http://www.fundinguniverse.com/company-histories/The-Procter-amp;-Gamble-Company-Company-History.html Procter & Gamble Co. (2006). P& G A Company History. Ohio. Procter & Gamble Co. (2011). P&G 2010 Annual Report. Ohio: Mixed Sources. Procter & Gamble Co. (2010). P&G 2010 Sustainability Overview. Ohio. Procter & Gamble Co. (2011). Purpose & People: P&G. Retrieved April 18, 2011, from P&G Website: http://www.pg.com/en_US/company/purpose_people/index.shtml Read More